Moody's may lower Sol Melia

Moody's Investors Service said it has placed the Ba1 corporate family rating and the probability of default rating of Sol Melia under review for possible downgrade.

The rating action follows the company's FY2008 results announcement on Feb. 27, the agency said.

"Today's rating action reflects Sol Melia's higher-than-anticipated leverage at the end of FY2008, which, at close to six times according to Moody's preliminary calculations, is significantly above the target levels for the Ba1 rating category," explained Marika Makela, assistant vice president-analyst in Moody's corporate finance group.

Moody's said it had previously stated that negative pressure on the rating could evolve if debt to EBITDA approached 5x.

Furthermore, Moody's noted the uncertain outlook guidance given for the beginning of 2009 and cautions that the economic conditions may put further pressure on the company's operating performance.

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